UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 25, 2006
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 1-13782 | 25-1615902 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 1001 Airbrake Avenue Wilmerding, Pennsylvania |
15148 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(412) 825-1000
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2006, the Company issued a press release reporting, among other things, the Company’s financial results for the quarter ended September 30, 2006. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 2.02 by reference.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing, and as set forth in Item 8.01 herein.
Item 8.01. Other Events.
On October 25, 2006, the Company issued a press release providing, among other things, updated earnings guidance for fiscal year 2006. A copy of the press release is attached to this report as Exhibit 99.1 and the second and third paragraphs thereof are incorporated into this Item 8.01 by reference.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
The following exhibit is furnished or filed, as applicable, with this report on Form 8-K:
| Exhibit No. | Description | |
| 99.1 | Press release dated October 25, 2006. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION | ||
| By: | /s/ Alvaro Garcia-Tunon | |
| Alvaro Garcia-Tunon | ||
| Chief Financial Officer | ||
Date: October 25, 2006
EXHIBIT INDEX
| Number | Description |
Method of Filing | ||
| 99.1 | Press release dated October 25, 2006. | Filed herewith. |
Exhibit 99.1
 |
1001 Air Brake Avenue Wilmerding, PA 15148 Phone: 412.825.1543 Fax: 412.825.1789 |
Press Release |
Contact: Tim Wesley at (412) 825-1543
Wabtec Reports Third Quarter Sales And EPS Growth, And Strong Cash Flow;
Raises 2006 Annual Guidance To EPS Of $1.70-$1.73 Excluding Restructuring
WILMERDING, Pa., Oct. 25, 2006 — Wabtec Corporation (NYSE: WAB) today announced third quarter 2006 earnings per diluted share of 35 cents including expenses of 9 cents per diluted share for a previously announced restructuring plan. Excluding these expenses, the company’s third quarter 2006 earnings per diluted share were 44 cents, more than 40 percent higher than the year-ago quarter. This was the 10th consecutive quarter the company has reported an earnings increase.
Wabtec also raised its 2006 annual guidance to earnings per diluted share of between $1.70-$1.73 excluding restructuring expenses, with annual sales expected to be between $1.06-$1.07 billion.
“Our strong performance in the third quarter and the outlook for the rest of the year give us the confidence to raise our guidance,” said Albert J. Neupaver, Wabtec’s president and chief executive officer. “We’re benefiting from strong, stable demand in our freight rail markets; growth in the transit market; internal cost-improvement programs; and our growth strategies. These positive drivers, combined with a multi-year backlog of more than $1 billion, make us optimistic about Wabtec’s future prospects as we position the company to achieve our long-term financial goal, which is to average annual double-digit growth in earnings per diluted share.”
2006 Third Quarter Results
During the quarter, the company recognized restructuring expenses of $6.8 million, or 9 cents per diluted share, primarily for pension-related accounting charges and fixed asset writedowns for the downsizing of two Canadian plants. The company expects to realize a payback of less than one year on cash restructuring expenses. Also during the third quarter, Wabtec recorded other charges of $2.2 million for warranty and inventory items, and it recognized a separate tax benefit of $1.4 million.
Sales in the 2006 third quarter increased 5 percent compared to the prior-year quarter, to $268.9 million. Transit Group sales grew 15 percent, primarily due to increased sales of commuter locomotives. Sales in the Freight Group increased 1 percent, as demand has remained stable at a high level. Cost of sales of $202.7 million included $6.3 million of the restructuring expenses and the other charges of $2.2 million, which resulted in a gross margin of 24.6 percent. Excluding these items, gross margin was 27.8 percent, compared to 26.2 percent in the year-ago quarter.
|
|
1001 Air Brake Avenue Wilmerding, PA 15148 Phone: 412.825.1543 Fax: 412.825.1789 |
Press Release |
Operating expenses were 3 percent higher, mainly due to the recognition of stock-based compensation expense under FAS-123 (R), which the company adopted at the beginning of this year, and $541,000 of amortization expense related to the restructuring. The company’s operating margin (income from operations divided by net sales) for the quarter was 9.5 percent. Excluding the restructuring expenses and other charges, the operating margin for the quarter was 12.8 percent, compared to 10.7 percent in the year-ago quarter.
The company had net interest income of $196,000, compared to net interest expense of $2.2 million in the year-ago quarter, due to higher interest rates on a higher cash balance in 2006. Other expense decreased due to a lower foreign exchange translation loss. The company’s effective tax rate was 31 percent, compared to a normal rate of about 36 percent, due to the tax benefit of $1.4 million from the successful resolution of certain outstanding tax issues from prior years.
At Sept. 30, 2006, the company had cash of $247.6 million and debt of $150 million, compared to cash of $141.4 million and debt of $150 million at Dec. 31, 2005. During the quarter, Wabtec repurchased 502,400 shares of company stock at a cost of $13.5 million, as part of a $50 million share repurchase program authorized by the Board of Directors in July. Through the first nine months of 2006, Wabtec has increased cash by more than $100 million, even including cash for the shares repurchased.
Following the end of the quarter, Wabtec completed the acquisition of Schaefer Equipment, Inc., for $36 million in cash. Schaefer Equipment, the leading manufacturer of forged brake rigging components for freight cars, has annual sales of about $30 million. Wabtec expects the transaction to be accretive immediately.
“Schaefer Equipment broadens our line of engineered brake components and supports our strategy to provide customers with a complete line of braking solutions to meet their needs,” Neupaver said. “We are continuing to evaluate other potential acquisition candidates that fit our disciplined financial and strategic criteria, as we use our strong balance sheet and cash flow to grow the company and build long-term shareholder value.”
Wabtec Corporation (www.wabtec.com) is a global provider of value-added, technology-based products and services for the rail industry.
This release contains forward-looking statements, such as statements regarding the company’s expectations about future earnings and market conditions. Actual results could differ materially from the results suggested in any forward-looking statement. Factors that could cause or contribute to these material differences include, but are not limited to, a slowdown in the North American economy; a decrease in freight or passenger rail traffic; an increase in manufacturing costs, especially raw materials; and other factors contained in the company’s regulatory filings, which are herein incorporated by reference. The company assumes no obligation to update these forward-looking statements or advise of changes in the assumptions on which they were based.
The company will conduct a conference call with analysts at 10 a.m., eastern time, today. To listen to the call via webcast, please go to www.wabtec.com.
WABTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
| Third Quarter 2006 |
Third Quarter 2005 |
For the Nine Months 2006 |
For the Nine Months 2005 |
|||||||||||||
| Net sales |
$ | 268,889 | $ | 255,670 | $ | 793,200 | $ | 763,767 | ||||||||
| Cost of sales |
(202,691 | ) | (188,701 | ) | (575,171 | ) | (573,611 | ) | ||||||||
| Gross profit |
66,198 | 66,969 | 218,029 | 190,156 | ||||||||||||
| Selling,general and administrative expenses |
(31,293 | ) | (30,813 | ) | (97,591 | ) | (90,448 | ) | ||||||||
| Engineering expenses |
(8,068 | ) | (7,995 | ) | (24,206 | ) | (24,848 | ) | ||||||||
| Amortization expense |
(1,362 | ) | (896 | ) | (3,088 | ) | (2,940 | ) | ||||||||
| Total operating expenses |
(40,723 | ) | (39,704 | ) | (124,885 | ) | (118,236 | ) | ||||||||
| Income from operations |
25,475 | 27,265 | 93,144 | 71,920 | ||||||||||||
| Interest income (expense), net |
196 | (2,235 | ) | (1,348 | ) | (6,884 | ) | |||||||||
| Other income (expense), net |
(139 | ) | (1,234 | ) | (1,285 | ) | (3,070 | ) | ||||||||
| Income from continuing operations before income taxes |
25,532 | 23,796 | 90,511 | 61,966 | ||||||||||||
| Income tax expense |
(7,791 | ) | (8,300 | ) | (30,920 | ) | (22,194 | ) | ||||||||
| Income from continuing operations |
17,741 | 15,496 | 59,591 | 39,772 | ||||||||||||
| Discontinued operations |
||||||||||||||||
| (Loss) income from discontinued operations (net of tax) |
(370 | ) | (420 | ) | (1,029 | ) | (297 | ) | ||||||||
| Net income |
$ | 17,371 | $ | 15,076 | $ | 58,562 | $ | 39,475 | ||||||||
| Earnings Per Common Share | ||||||||||||||||
| Basic | ||||||||||||||||
| Income from continuing operations |
$ | 0.36 | $ | 0.33 | $ | 1.23 | $ | 0.85 | ||||||||
| (Loss) income from discontinued operations |
— | (0.01 | ) | (0.02 | ) | — | ||||||||||
| Net income |
$ | 0.36 | $ | 0.32 | $ | 1.21 | $ | 0.85 | ||||||||
| Diluted | ||||||||||||||||
| Income from continuing operations |
$ | 0.36 | $ | 0.32 | $ | 1.22 | $ | 0.84 | ||||||||
| (Loss) income from discontinued operations |
(0.01 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | ||||||||
| Net income |
$ | 0.35 | $ | 0.31 | $ | 1.20 | $ | 0.83 | ||||||||
| Weighted average shares outstanding |
||||||||||||||||
| Basic |
48,689 | 47,574 | 48,309 | 46,664 | ||||||||||||
| Diluted |
49,293 | 48,311 | 48,905 | 47,409 | ||||||||||||
| Sales by Segment | ||||||||||||||||
| Freight Group |
$ | 179,474 | $ | 178,083 | $ | 555,576 | $ | 525,322 | ||||||||
| Transit Group |
89,415 | 77,587 | 237,624 | 238,445 | ||||||||||||
| Total |
$ | 268,889 | $ | 255,670 | $ | 793,200 | $ | 763,767 | ||||||||